Investment Commentary – March 24th, 2016

Market Indices as of Market Close March 24th, 2016
Dow 17,502 (0.45% YTD)
S&P 2,036 (-0.35% YTD)
NASDAQ 4,768 (-4.76% YTD)
Global Dow 2,274 (2,033 52 week low /2,644 high)
10-year Treasury 1.86 (1.53 52 week low /2.50 high)
Gold 1,224 ($1,047 52 week low /high $1,288)
Oil $38.72 ($29.85 52 week low /high $65.39)

JPM: The Week in Review

• Retail sales fell -0.1% m/m
• Core CPI increased to 2.3% y/y
• Core PPI increased to 1.2% y/y
• Fed Mfg. surveys turned positive
• Single-family home starts up 7.2%
• Industrial production fell -0.5% m/m
• Job openings increased to 5.5 million
• Consumer sentiment estimate fell to 90.0

On Wednesday afternoon the Federal Open Market Committee (FOMC) unsurprisingly announced that they maintained the federal funds rate at its current range of 0.25% to 0.5%. They simultaneously released their updated economic projections for employment, inflation, economic growth and the federal funds rate, which interestingly showed they now only expect 2 rate hikes this year as opposed to the previously anticipated 4. Regardless of this change, but especially because of it, this rate hiking cycle proves to be not only the slowest of the previous six which we illustrate in this week’s chart, but also starts from a far lower base rate than any previous cycle. While markets reacted positively to the decision, we believe that maintaining the current accommodative policy in the current U.S. economic environment may cause more economic uncertainty rather than stimulate growth. With the labor force continuing to tighten and the highest increase in core CPI of the expansion, the Fed may be forced to tighten more sharply than expected later on.

Lord Abbett Tip for Non-Deductible Contributions from Brian Dobbs: Be Sure to Report After-tax IRA Contributions to the IRS

Don’t forget IRS Form 8606! Besides being the most talked about, least understood form regarding IRA reporting, it could save you from being taxed twice on your retirement savings.
Nondeductible, or aftertax, contributions to IRAs began to be allowed in 1987. The importance of Form 8606 has grown along with the popularity of IRAs, Roth conversions, and the expanded ability to roll over aftertax (but non-Roth) assets from qualified plans.

Form 8606, which is filed with individuals’ tax returns, serves to track IRA account owners’ aftertax contributions to their traditional IRAs. If the form is not duly filed, the IRS will be unaware that some or all of an individual’s IRA contributions were nondeductible and that taxes were paid on those assets before they were deposited in the IRA. In the absence of that knowledge, the IRS could expect to collect taxes on all the assets when they are distributed in the future.


March 24, 1989: Nation’s Worst Oil Spill

The nation’s biggest oil spill occurred when the giant Exxon Valdez supertanker hit a reef, causing it to leak 11 million gallons of oil into Prince William Sound.

The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.